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FOREIGN AND COMMONWEALTH AFFAIRS
European Union Budget 2007–13
The Secretary of State for Foreign and Commonwealth Affairs (Mr. Jack Straw): As presidency of the European Union, Her Majesty's Government is today circulating to all member states of the European Union for discussion comprehensive proposals for the European Union budget in the next financial period 2007–13 inclusive. Copies of the proposal are available in the Library of the House and in the Vote Office.
This written ministerial statement outlines the context of the proposal. These budget proposals have four policy objectives:
The first is tough budget discipline. They are below the level proposed by the Luxembourg presidency in June and 17 per cent. below the level proposed by the Commission.
Second, they help the new member states in the enlarged EU by building their economies and societies, and they more fairly distribute the costs among the better off nations. The UK is offering an extra contribution to these costs of enlargement amounting to 8 billion euros over the budget period.
Third, these proposals keep the rebate. Indeed the rebate will rise, from an annual average over recent years of 5 billion euros to around 7 billion.
Fourth, these proposals ensure there can be no fundamental change in the rebate without fundamental reform of the Common Agricultural Policy. All spending, including on agriculture, will be subject to a review during the coming budget period.
Let me explain in more detail.
Last year the Commission proposed a budget of 1,025 billion euros, or 1.24 per cent. of the total national income of all member states (GNI). We said all along that this was far too high. There would be no chance of any serious budgetary reform in specific areas without strong downward pressure overall. Given this, and the demand of the six "budget disciplinarians" [France, Germany, Sweden, Austria, Netherlands and UK], the Luxembourg presidency reduced their proposed budget to 1.06 per cent. or 871 billion euros. This latest proposal would further reduce the budget to at 847 billion euros
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or 1.03 per cent. [on the commitments basis] and by the end of the budget period spending will be below the 1 per cent. level the six had proposed. This would be a major achievement.
It is important to see these proposals in a longer-term context. EU spending hit 1 per cent. of GNI in 1985 and rose rapidly under Baroness Thatcher and Sir John Major as a proportion of national income, by a quarter to 1.25 per cent. by the early 1990s. and it started to come down only in 1998. These proposals would bring it down further.
The new member states will receive 150 billion euros in structural and cohesion funding. That is an enormous amount and would represent very large new funds. Total funding through all EU programmes to the 10 new member states is worth twice the Marshall plan which funded the reconstruction of Western Europe nearly 60 years ago [at today's prices].
And we are ensuring that these countries will be able to spend much more of what they have been allocated. This is a very important point because the record shows that year by year both the existing and new member states have not been able to spend their full allocation for many technical reasons. We have included a series of very practical changes to ensure that they are better able to do so. This means that while headline entitlements are lower by 14 billion euros than in the June proposals, we are confident that all these countries will be better able to spend what they have been allocated. And we are proposing strengthened financial management arrangements.
Under our proposals, for example, Hungary would receive 22 billion euros in structural and cohesion funding the Czech Republic 23 billion euros and Poland 56 billion euros.
Of course there are those who ask why our taxpayers in western Europe should pay for roads, railways and other reconstruction projects in the east, the answer is that all enlargements have benefited all members economically by increasing the total volume of EU trade, investment and jobs in which all have a share. British trade with the new member states has already increased by 400 per cent. since 1990, 10 times the rate of growth with the rest of the world. That is an indication of the economic potential we will be helping to unlock by making this investment in Europe's future. It is very much in Britain's national interest for the world's largest single market to grow and become more prosperous. And the benefits of enlargement are not just economic. It must be in Britain's interest to have increasingly stable societies in Eastern Europe.
As I have spelt out, and as these proposals make clear, the UK Government recognises its responsibility to pay a fair contribution to the cost of enlargement—an historic project supported across the political divide. It has been a strategic objective of successive British Governments and, happily, has enjoyed very active all-party support. The Opposition parties have called for significant increases in structural and cohesion funding in Central and Eastern Europe. This budget delivers that objective. But it has to be paid for. We all prepared to pay our fair share, but no more than our fair share.
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As EU spending shifts from older member states to the new, the British contribution will inevitably rise, along with the contributions of all the EU 15 member states. But the proposals tabled by the Luxembourg presidency would have left us with a bill of more than 20 billion euros over and above the 50 billion euros that would be our contribution under existing arrangements. That was not acceptable then, nor is it now. The proposal we have tabled today will take our contribution to 58 billion over the seven-year period of the budget.
This is the equivalent of halving the value of the rebate in respect of structural and cohesion funding in the 10 new member states. This could be achieved either by not applying the rebate to a proportion of structural and cohesion funding in the new member states, or by a technical route to increasing our gross contributions.
The UK will in any event continue to receive the full value of the rebate as it applies to the Europe of 15, and to all CAP spending throughout the union. And the rebate will rise, because it increases in proportion to our net contribution. The rebate will increase from an annual average of 5 billion euros in the current financial period, to around 7 billion.
The rebate was negotiated in 1984, but it did not prevent a very significant rise in the EU's take of member states' national income. Nor did it deal with the underlying problem which made the rebate necessary. And it did not prevent the UK paying twice as much as France and Italy, countries with similar sized economies. With these proposals today, Europe's spending comes down as a proportion of income. And for the first time since the UK joined 30 years ago, we would pay roughly the same as France and Italy as a share of national income.
This is a budget which seeks to invest in Europe's future, and not only through enlargement.
Our proposals provide for a comprehensive and wide ranging review, covering all aspects of revenue and expenditure, including agriculture. This will be conducted by the Commission, which will submit a report in 2008. On the basis of the review, the EU would be able to make changes in the 2007–13 financial period.
We have always made clear our overall aim is to secure fundamental reform of spending which would remove the underlying justification for the rebate. The mechanism we propose for a review both of revenue and expenditure undertaken by the Commission would put us on a pathway to a reformed European Union better able to compete in the global economy. The budget we have circulated today is a tough package which recognises the responsibilities of all members of the EU to both pay a fair contribution towards the future well being of the Union.
It provides a sound basis on which all our citizens can thrive in an enlarged European Union.
A bigger, more prosperous European Union means a stronger, more prosperous Britain. These are good proposals for the UK and good proposals for Europe.
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HOME DEPARTMENT
Police Authorities in England and Wales (Grant Allocations)
The Minister for Policing, Security and Community Safety (Ms Hazel Blears): I have today placed in the Library a copy of the Home Secretary's proposals for allocation of police grant for England and Wales in 2006–07 and 2007–08. The Home Secretary and I intend to implement the proposals subject to consideration of any representations and to the approval of the House.
This Government have put unprecedented levels of investment into the Police Service in England and Wales in recent years. This investment has helped to expand local policing, reduce crime and help to make our communities safer. Police Officer, Police Staff and Community Support Officer numbers are all at record levels, police performance continues to improve and the police have never been better equipped with the tools and powers to respond to the needs of local communities. On a like for like basis Government grant and central spending on services for the police will have increased by 56 per cent. or almost £4.0 billion between 2000–01 and 2007–08.
Our ambitious police reform programme continues to produce real improvements but there is still more to do to ensure that the Police Service meets the challenges of the 21st century. People are safer now but we want them to feel safer too. Key elements of the reform programme are about building a responsive, accessible police service which successfully tackles local concerns about crime and anti-social behaviour. As part of this, we are committed to ensuring that every neighbourhood has a neighbourhood police team by 2008; to continuing to modernise the police workforce to ensure it is able to deliver a more responsive, citizen focused service that the public want; and to reshape the national policing landscape to ensure it is able to meet the policing challenges of the modern world. A key part of this is the reconfiguring of the service around larger strategic police forces which will have sufficient capacity and capability to provide the full range of protective services to the public alongside responsive neighbourhood policing.
The National Community Safety Plan, which incorporates the National Policing Plan 2006–09, was published on 16 November. Our key policing priorities are to reduce overall crime; bring more offenders to justice, provide dedicated, visible, accessible and responsive neighbourhood police teams, tackle serious and organised crime including improved intelligence and information sharing between partners and protect the country from both terrorism and domestic extremism. The police funding settlement for the coming two years will support the priorities outlined in the plan.
This year, for the first time, the Government are providing planning totals for two years. Total provision for policing grants and central spending in 2006–07 will be £10,570 million, an overall increase of 5.0 per cent. This includes an increase of 3.4 per cent. in general grant (including a small increase to take account of losses from Amending Reports).
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Indicative figures for 2007–08 are an overall increase to £11,047 million (4.5 per cent.) with an increase of 3.7 per cent. in general grant.
In this statement, I want to outline provision for support for the Police Service in England and Wales.
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We propose to distribute the settlement as set out below. The table includes funding for both local and central spending.
(1) The transfer from general grant for police pensions and dedicated security are noted below.
(2) Details are set out later in the statement.
Police funding proposals within the Local Government finance system are being announced by my hon. Friend the Member for Oldham East and Saddleworth today, and by the Welsh Assembly Government.
Provisional general policing grants (ie Home Office Police Grant, Revenue Support Grant and National Non Domestic Rates) for English and Welsh police authorities in 2006–07 and 2007–08 compared with 2005–06 are given in Tables 2 and 3. The figures for 2006–07 take into account our proposed amendments to the settlements for 2004–05 and 2005–06.
With my right hon. Friend the Deputy Prime Minister, we have reviewed the Police Grant formula. We have decided to use the most comprehensive and technically robust option, on which we consulted during the summer, as a basis for formula change. We have updated the existing 1995 formula that used data from the early 1990s, to bring it in line with modern conditions. At the same time, we are concerned to maintain stability of funding during a period of major structural change. We have therefore decided to apply a broadly flat rate increase for all Police Authorities for 2006–07 and 2007–08. This will be 3.2 per cent. and 3.7 per cent.
The settlement continues to take account of our commitment to improve efficiency and effectiveness in the police service. We expect the police service to build on impressive efficiency gains of £316 million (3.24 per cent.) in 2004–05 and projected gains of £360 million (3.5 per cent.) for 2005–06 through continued focus on the target of £1,069 million of cumulative gains by the end of 2007–08. Half these gains are to be cashable. The greater certainty over funding for 2007–08 should help forces and authorities plan to meet this target. The Home Office, the Association of Chief Police Officers (ACPO) and the Association of Police Authorities (APA) will continue to work in partnership to deliver cumulative year on year improvements in the value for money to deliver the efficiency targets.
If Police Authorities deliver efficiency gains, and exercise judicious financial planning, there is no reason for them to set excessive increases in police precepts on council tax next year. The Government's policy in relation to average council tax increases of less than 5 per cent. in each year in 2006–07 and 2007–08 has been clearly set out by my hon. Friend the Minister for Local Government. The Government are prepared to take capping action if necessary.
Details of the Amending Report for 2004–05, to take account of changes to ONS population data, and the Amending Report for 2005–06, chiefly to take account of changes to pensions' data from Derbyshire and Lancashire, were set out in my written statement of 31 October. The Government made clear in the Consultation Paper on formula grant distribution that they would apply the same approach to grant adjustment as they did in relation to the 2003–04 Amending Report. We have therefore adjusted 2006–07 grants to ensure that any authority owing money under the Amending Reports will be able to pay it back in 2006–07 and still be left with at least the broadly flat rate grant increase over 2005–06. The consultation period for both Amending Reports will end on the same date as the consultation on the funding settlement proposals 2006–07 and 2007–08 on 11 January 2006.
We have for several years ensured that Welsh Police Authorities were treated in line with English Police Authorities with respect to the floor damping mechanism. In 2006–07 and 2007–08 we have adjusted the Home Office Police Grant of Welsh Police Authorities to maintain consistency with the English. The Home Secretary has provided additional support of £7.8 million in 2006–07 and £11.3 million on 2007–08 to
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ensure that Dyfed-Powys Police Authority, Gwent Police Authority and North Wales Police Authority receive at least a minimum increase in grant in line with English authorities. The shortfalls are further funded by scaling police grant to South Wales Police Authority which would otherwise have received a general grant increase of around 6 per cent. but now receives the equivalent increases to a police authority in England in both years.
I have changed the provision for the Metropolitan Police special payment to reflect wider formula changes. I have allocated annual formula increases of £5 million in 2006–07 and 2007–08 and £15 million is added for the higher costs of Metropolitan Police Authority civil staff pensions. At the same time I have reduced the provision by £50 million as part of the consolidation of Counter Terrorism funding and this will be included within the Metropolitan Police Service's (MPS's) allocation within the Single Consolidated Fund.
Over the past five years specific grants have been a very effective tool in delivering key aims and targets and funding new policing initiatives. We have made it clear over the past few months that we wanted to give police authorities more control over specific grants. We have therefore decided to consolidate four specific grants into a single pot for each authority. Each authority will get the actual or estimated level of funding it receives from these grants. We hope that this rationalisation will enable authorities to operate more flexibly. However we will expect authorities to honour commitments and agreed policy initiatives to build on the outstanding successes that these grants have so far achieved. Totals for each Police Authority are set out in the draft Police Grant Reports 2006–07 and 2007–08. The special formula grants are:
The Rural Policing Fund (£30 million)
The Rural Policing Fund was introduced in 2000–01 to target funds specifically at forces that police the most sparsely populated areas.
Special Priority Payments (£69 million)
Special Priority Payments are an integral part of the police pay system, enshrined in regulations following the Police Negotiating Board agreement in 2002.
London and South East Allowances (£48 million)
These allowances were introduced from 2001–02, following a recommendation by the Police Negotiating Board, to address specific recruitment issues in the South East.
The benefits to crime detection since this grant was introduced in 2000 have been enormous. It is important that the police service maintains the capacity that has been developed for the efficient and effective collection and use of DNA material from individuals and crime scenes. Without sampling of newcomers to crime and the collection of DNA samples from crime scenes, the benefits of the previous investment in the detection of crime and the benefits of legislative changes introduced by the Government allowing the DNA sampling of persons when arrested, will be reduced. The Home Office will continue to monitor and report on the use of
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forensics, particularly DNA, by forces in dealing with the investigation and detection of crime. Any significant changes will be highlighted and an explanation will be sought from the forces concerned.
Specific grants for police authorities
Police Authorities will continue to receive extra funding through a number of specific grants for particular schemes. Targeted grants were introduced as a direct response to what the police service and the public told us they wanted. Total provision for specific grants in 2006–07 is £588 million and in 2007–08 is £840 million (Table 4).
£277 million will again be made available to forces to continue to support the costs of officers recruited through the Crime Fighting Fund. This Fund has been remarkably successful in helping the police service boost its strength which is at a historically high level of more than 141,000. In response to concerns raised by both Chief Constables and Police Authorities we have relaxed the terms of the Fund this year and are willing to discuss with the service further flexibility in the use of this money from 2006–07.
Community Support Officers (CSOs):
CSOs free up police officer time, provide reassurance and have powers to deal with aspects of anti-social behaviour and low level crime. This settlement honours our undertaking given in "Neighbourhood Policing—your police; your community; our commitment" (March 2005) to provide £88 million in 2006–07 and £340 million in 2007–08 to support our target of 24,000 CSOs by 2008. Details were set out in letters to Chief Constables and Police Authorities on 7 November 2005. In addition to this, for 2006–07, we have allocated £44 million for continuing support of CSOs recruited in the first three rounds from 2002 onwards and this support will continue in 2007–08.
Basic Command Unit (BCU) Fund:
£50 million will again be provided for BCUs. These are at the forefront of local policing. The grant will again be targeted towards forces with BCUs in high crime areas to help reduce crime in partnership with Crime and Disorder Reduction Partnerships. All forces in England and Wales will continue to receive a share of the grant. BCU Commanders will again have discretion locally to pool their allocations with the new Safer and Stronger Communities Fund.
Initial Police Learning and Development Programme (IPLDP):
We have worked with the Central Police Training and Development Authority (Centrex), to calculate the maximum savings that we believe can be transferred from their foundation training budget to IPLD programmes in forces next year and the following year. £13 million will be transferred to forces from Centrex's baseline in 2006–07, with the remaining foundation training budget becoming available in 2007–08. With this, and with funding that was removed from the Centrex baseline this year, we are able to increase substantially the funding per recruit that is available to forces for their initial police learning and development programmes. Some funding will remain with Centrex in 2006–07 so that they can continue to deliver foundation
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training for the first two months of the financial year. Each force, with the exception of the MPS (whose money for training is already included in their baseline funding, and who do not currently send recruits to Centrex for training), will receive £3,000 per IPLDP recruit in 2006–07 and 2007–08. Payment will be made up to the level of recruits that each force needs to maintain their force strength at 31 March 2005. This compares with just over £1,900 per recruit that we were able to make available to forces this financial year.
As a result of recent events the Government consider that policy and funding for Counter Terrorism should be more closely linked to improve effectiveness. We have therefore drawn together existing grants, including the provision for Dedicated Security Posts formerly in general grant, into a single consolidated grant for Counter Terrorism. We will be augmenting the amounts transferred from general grant for counter-terrorism and the increase will be announced shortly. Within the increase in general grant to police authorities in 2007–08 we have made provision of £25 million to enable authorities to enhance further their counter-terrorism capability.
We are currently working very closely with ACPO on this matter. We see an important role for ACPO in the management of this grant and for ensuring coherence, strategic direction and for the provision of a nationally co-ordinated response. We will work closely with ACPO to ensure that both this uplift and funding from the new consolidated Counter Terrorism grant are used to create a significant increase in the strength of the police's counter-terrorism capability.
While we have included the MPS within the scope of this grant we are all conscious of the very important contribution that the MPS provides to our counter terrorist effort—not least its anti-terrorist investigation capability—and its vital role in protecting our capital city and its citizens from the terrorist threat. On that basis we believe that we should continue to fund the service separately so that Parliament is assured that the MPS's national capabilities are effectively funded.
Both we and ACPO are committed to ensuring that the Police Service both nationally and regionally has a robust, resilient and effective Counter Terrorist capability.
The Home Secretary and I intend to allocate provision of capital grant for 2006–07 and 2007–08 later this month. We propose to plan grant allocation over the two years to take into account prospective force amalgamations.
Safer and Stronger Communities Fund
The newly created Safer and Stronger Communities Fund was rolled out to all Local Authorities in England in 2005–06. It brings together existing Home Office and ODPM funding streams. This Fund will total a minimum of £220 million in 2006–07, the Home Office contributing a minimum of £70 million resource and £20 million capital. The police service, subject to the agreement of other local partners, will be able to draw upon these funds to support local crime reduction
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initiatives. The Home Office Crime Team within the Welsh Assembly is currently liaising with the Home Office on establishing similar arrangements for Wales.
Asset Recovery Police Incentivisation scheme
This scheme boosts asset recovery by giving forces a direct stake in the proceeds they generate from the work. The police service received £13 million in 2005–06 (one third of the total assets recovered over and above £40 million in 2004–05). This will increase to one half in 2005–06 payable in 2006–07 with the maximum benefit available to the police of £65 million. From 2006–07, under a new incentive scheme, all asset recovery agencies including the police will receive back 50 per cent. of what they recover.
Serious Organised Crime Agency
Work is on track to launch the new Serious Organised Crime Agency (SOCA) on 1 April 2006. It is intended for the precursor agencies to begin transferring business to SOCA from January in order to ensure a smooth transition. SOCA's strategy for 2006–07 is based on a workforce strength of 4,250 staff and an initial budget of £400 million, including provisions to be made from HM Revenue and Customs and the UK Immigration Service.
National Policing Improvement Agency
We intend to establish the National Policing Improvement Agency (NPIA) on 1 April 2007, subject to legislation. The aim of the NPIA is to introduce a radically different model of police service leadership as well as producing greater efficiency, consistency and clarity of purpose in service delivery. The NPIA will be a new organisation that rationalises several other bodies. The agency's purpose will be to drive improvement in the police service. It will replace the existing organisations Centrex and the Police Information Technology Organisation (PITO). There will also be significant implications for the work of ACPO, the Home Office and the APA. Budgets for precursor agencies will be announced by 31 January.
With effect from April 2006 a new financial arrangement for funding police pensions will commence. This will replace the present practice whereby each police authority is responsible for paying the pensions of its former employees on a "pay-as-you-go" basis. The new system will eliminate the effect of the volatility resulting from significant fluctuations in the number of police officers retiring in any given year and consequently reduce cost pressures being passed on to council tax precepts. It will also introduce greater transparency by making clear the actual level of resources available for service delivery.
Under the new arrangements Police Authorities will continue to be responsible for paying pensions to former police employees and to receive grant funding to support the employers' contributions. Any deficits on an authority's net pension costs will be met from a central specific grant managed by the Home Office. To create this central pension pot £313 million for 2006–07 and £328 million for 2007–08 has been held back from the funding settlement. The new arrangements will be cost neutral. The aggregate amount held back will be used to reimburse authorities for their actual pension costs shortfall.
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Details of the new funding arrangements were set out in my statement of 29 November.
We have listened very carefully to all stakeholders in determining this settlement. We have provided the investment to deliver record numbers of Police Officers, Police Staff and an expanding number of CSOs and have
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provided the police with new tools to tackle the crimes that concern communities most. We will continue to work closely with the police to improve their efficiency and responsiveness to local communities. Our proposals will ensure that all forces in England and Wales receive a fair share of resources in the coming two years, in a time of radical restructuring that will give the police the organisation they need to face the challenges of the future.
Notes:
(1) Rounded to the nearest £100,000. Grant as calculated under the Local Government Finance Report (England) and Local Government Finance (Police) Report (Wales). This includes the Metropolitan Police special payment, and the effects of floors and ceilings.
(2) Base positions are adjusted for the transfer of pensions and security funding.
(3) Figures for the City of London relate to Home Office Grant only as calculated in the Police Grant Report (England and Wales). Revenue Support Grant is allocated to the Common Council of the City of London as a whole in respect of all its functions. The City is grouped with education authorities for the purposes of floors.
(4) Welsh figures include Home Office floor funding.
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Notes:
(5) Rounded to the nearest £100,000. Grant as calculated under the Local Government Finance Report (England) and Local Government Finance (Police) Report (Wales). This includes the Metropolitan Police special payment, and the effects of floors and ceilings.
(6) Figures for the City of London relate to Home Office Grant only as calculated in the Police Grant Report (England and Wales). Revenue Support Grant is allocated to the Common Council of the City of London as a whole in respect of all its functions. The City is grouped with education authorities for the purposes of floors.
(7) Welsh figures include Home Office floor funding.
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